EXHIBIT 8
[Werner & Blank, LLC Letterhead]
June 3, 2003
Marine Bancshares, Inc.
2325 Vanderbilt Beach Road
Naples, Florida 34109
Attn: Mr. Pierce T. Neese, Chairman
Ladies and Gentlemen:
Pursuant to Section 7.02(c) of the Agreement and Plan of Merger dated
as of December 31, 2003 (the "Agreement"), by and between Old Florida
Bankshares, Inc., a Florida corporation ("Old Florida") and Marine Bancshares,
Inc., a Florida corporation ("Marine"), as a condition to the closing of the
merger, under the laws of the State of Florida, of Marine with and into Old
Florida pursuant to the terms of the Agreement (the "Merger"), we hereby render
our opinion as to the material federal income tax consequences of the Merger.
In rendering this opinion, we have examined the originals or certified,
conformed, or reproduction copies of, and have relied upon the accuracy of,
without independent verification or investigation, (i) the Agreement; (ii) the
Old Florida Bankshares, Inc. Officer's Certificate dated April 29, 2003; (iii)
the Marine Bancshares, Inc. Officer's Certificate dated April 29, 2003; and (iv)
the Registration Statement of Old Florida on Form S-4, as amended (Registration
No. 333-103907) (the "Registration Statement") as filed with the Securities and
Exchange Commission (the "SEC") on June 3, 2003.
In connection with our review of the Agreement, the Officers'
Certificates described above (collectively, the "Officers' Certificates"), and
the Registration Statement, we have assumed the genuineness of all signatures,
the authenticity of all items submitted to us as originals, the uniformity with
authentic originals of all items submitted to us as copies, and the conformity
to final versions of all items submitted to us in draft version. We also have
assumed, without independent verification or investigation, that (i) we have
been provided with true, correct, and complete copies of all such documents,
(ii) none of such documents has been amended or modified, (iii) all such
documents are in full force and effect in accordance with the terms thereof,
(iv) there are no other documents which affect the opinions hereinafter set
forth, and (v) the documents reviewed by us reflect the entire agreement of the
parties thereto with respect to the subject matter thereof. Finally, we assume
that all representations made to the knowledge of any person or entity or with
similar qualification are true and correct as if made without such
qualification.
DESCRIPTION OF THE MERGER
The Agreement provides that the Merger will constitute a merger, under
the laws of the State of Florida, of Marine with and into Old Florida. Old
Florida will be the surviving corporation, and the separate corporate existence
of Marine will cease. Immediately after the Merger, Marine National Bank, a
national banking association and the wholly owned subsidiary of Marine, will be
merged into Old Florida Bank, a Florida chartered bank and the wholly-owned
subsidiary of Old Florida. Old Florida will continue the banking business of
Marine.
As of May 27, 2003, the authorized capital stock of Old Florida
consisted of 5,000,000 common shares, $.01 par value per share ("Old Florida
Common"), of which 1, 216,595 were issued and outstanding and 1,000,000
preferred shares, $.01 par value per share, none of which are outstanding. As of
May 27, 2003, the authorized capital stock of Marine consisted of 10,000,000
common shares, $.01 par value per share ("Marine Common"), of which
Marine Bancshares, Inc.
June 3, 2003
Page 2
1,150,000 shares were issued and outstanding and 2,000,000 preferred shares,
$.01 par value per share, none of which were outstanding. Further, as of May 27,
2003, there were 243,025 shares of Marine Common subject to outstanding stock
options and warrants.
On the date the Merger becomes effective (the "Effective Date"), each
share of Marine Common then issued and outstanding, other than shares of Marine
Common (i) held in treasury of Marine, or (ii) as to which the holder has
asserted, as of the Effective Date, dissenters' rights in accordance with the
provisions of Section 607.1303 of the Florida Business Corporation Act
("Dissenting Shares"), shall be converted into .62 shares of Old Florida Common.
Each share of Marine Common held in the treasury of Marine immediately
prior to the Effective Date shall, by virtue of the Merger, be canceled and
retired and all rights in respect thereof shall cease to exist. Holders of
Dissenting Shares shall, upon the effectiveness of the Merger with respect to
such Dissenting Shares, have only such rights, if any, as they may have pursuant
to Sections 607.1302 and 607.1303 of the Florida Business Corporation Act, and
any amounts required by Section 607.1303 to be paid to any holder of Dissenting
Shares shall be paid by Old Florida as the surviving corporation.
Neither fractional shares nor scrip for fractional shares of Old
Florida will be issued by Old Florida in the Merger. In lieu thereof, each
holder of shares of Marine Common shall receive cash in an amount determined by
multiplying the fractional share interest to which such holder otherwise would
be entitled by $12.50.
As a condition precedent to the consummation of the Merger, Dissenting
Shares cannot constitute more than 20% of the outstanding Marine Common entitled
to vote on the Merger.
REPRESENTATIONS
In connection with the Merger, the Officers' Certificates set forth the
following representations:
1. The Merger is being effected for bona fide business reasons.
2. Neither Old Florida nor a related person has any plan or
intention to reacquire any shares of Old Florida Common issued in the Merger.
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Marine Bancshares, Inc.
June 3, 2003
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3. Old Florida has no plan or intention to sell or otherwise
dispose of any of the assets of Marine acquired in the Merger, except for
dispositions made in the ordinary course of business or transfers described in
Section 368(a)(2)(C) of the Internal Revenue Code of 1986, as amended (the
"Code").
4. The liabilities of Marine assumed by Old Florida in the Merger
and the liabilities to which the transferred assets of Marine are subject were
incurred by Marine in the ordinary course of its business.
5. Following the Merger, Old Florida or a related person will
continue the historic business of Marine or use a significant portion of
Marine's historic assets in a business.
6. Whether or not the Merger is consummated, Old Florida, Marine
and the shareholders of Marine will pay their respective expenses, if any,
incurred in connection with the transactions contemplated by the Agreement,
provided, however, that Old Florida and Marine will share equally all expenses
incurred in connection with filing, printing, and mailing the Registration
Statement and the Proxy Statement/Prospectus, and Old Florida will pay all fees
due to regulatory authorities and the SEC in connection with the transactions
contemplated by the Agreement. Marine will pay its expenses incurred in
connection with such transactions except for those paid or assumed by Old
Florida. To the extent that Old Florida pays or assumes expenses of Marine, Old
Florida will pay or assume only those expenses of Marine that are solely and
directly related to such transactions in accordance with Revenue Ruling
73-54,1973-1 C.B. 187.
7. There is no intercorporate indebtedness existing between
Marine and Old Florida that was issued, acquired, or will be settled, at a
discount.
8. The fair market value of the assets of Marine transferred to
Old Florida will equal or exceed the sum of the liabilities assumed by Old
Florida plus the amount of the liabilities, if any, to which the transferred
assets are subject.
9. The payment of cash in lieu of fractional shares of Old
Florida Common is solely for the purpose of avoiding the expense and the
inconvenience to Old Florida of issuing fractional shares and does not represent
separately bargained-for consideration. The total cash that will be paid in the
Merger to the shareholders of Marine instead of issuing fractional shares of Old
Florida Common will not exceed one percent (1%) of the total consideration that
will be issued in the Merger to the Marine shareholders in exchange for their
shares of Marine Common. The fractional share interests of each Marine
shareholder will be aggregated, and no shareholder will receive cash in an
amount equal to or greater than the value of one full share of Old Florida
Common.
10. None of the compensation received by any shareholder-employees
of Marine will be separate consideration for, or allocable to, any of their
shares of Marine Common; none of the shares of Old Florida Common received by
any shareholder-employees will be separate consideration for, or allocable to,
any employment agreement; and the compensation paid to any shareholder-employees
will be for services actually rendered and will be commensurate with amounts
paid to third parties bargaining at arm's length for similar services.
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DISCUSSION
Section 368(a)(1)(A) of the Code defines a tax-free reorganization to
include a statutory merger. Since the Merger will be a statutory merger under
the laws of the State of Florida, the statutory requirement is satisfied.
Moreover, Marine and Old Florida each will be a "party to the reorganization"
within the meaning of Section 368(b) of the Code.
In addition, certain non-statutory requirements have been imposed by
the courts and by the Internal Revenue Service (the "Service") in determining
whether reorganizations are in compliance with Section 368 of the Code. These
include requirements that there be a business purpose for the reorganization,
that there be a continuity of the business enterprise of the acquired
corporation, and that the shareholders of the acquired corporation emerge with
some continuing proprietary interest in the entity resulting from the
reorganization.
Section 1.368-2(g) of the Treasury Regulations (the "Regulations")
provides that a reorganization must be undertaken for reasons germane to the
continuance of the business of a corporation which is a party to the
reorganization. As indicated in the Officers' Certificates, the Merger is being
effected for bona fide business reasons. Accordingly, the Merger satisfies the
business purpose requirement as set forth in the Regulations.
Section 1.368-1(b) of the Regulations provides that a continuity of
business enterprise is a prerequisite to a reorganization. Section 1.368-1(d) of
the Regulations (and as modified by T.D. 8760) provides that continuity of
business enterprise requires that the acquiring corporation or a related person
either continue the acquired corporation's historic business or use a
significant portion of the acquired corporation's historic assets in a business.
Revenue Ruling 85-197, 1985-2 C.B. 120, provides that for purposes of the
continuity of business enterprise requirement, the historic business of a
holding company is the business of its operating subsidiary. Similarly, Revenue
Ruling 85-198, 1985-2 C.B. 120, held that the continuity of business enterprise
requirement was met where the business of a former subsidiary of the acquired
holding company was continued through a subsidiary of the acquiring corporation.
Accordingly, the continuity of business enterprise requirement is met with
regard to the Merger, because Old Florida will continue the banking business
conducted by Marine National Bank, the wholly owned subsidiary of Marine.
Generally, the continuity of interest test requires the owners of the
acquired corporation to receive and maintain a meaningful equity in the
surviving entity. The Service has issued final and temporary regulations (T.D.
8760 and 8761) providing rules for satisfying the continuity of interest
requirement. These regulations substantially liberalize the historic rules,
generally providing that continuity of interest is satisfied if a substantial
part of the value of the proprietary interest in the acquired corporation is
preserved in the reorganization. In determining whether a substantial part of
the value of the proprietary interest is preserved, the following transactions,
in connection with the reorganization, are considered. First, under Section
1.368-1 of the Regulations, any acquisition by the acquiring corporation of
acquired corporation stock for consideration other than stock, or in connection
with the reorganization, the redemption of acquiring corporation stock received
by the shareholders of the acquired corporation (or the purchase of such
acquiring corporation stock by a person related to the acquiring corporation),
will be considered in determining whether a substantial proprietary interest is
preserved. Second, under Section 1.368-1T of the Regulations, the acquisition by
the acquired corporation, prior to and in connection with the plan of
reorganization, of the stock of the acquired corporation with consideration
other than stock of the acquired corporation or an extraordinary distribution
made by the acquired corporation with respect to its stock, will be considered
in determining whether a substantial proprietary interest is preserved. Third,
under Section 1.368-1T of the Regulations, the acquisition by a person related
to the acquired corporation, prior to and in connection with the plan of
reorganization, of the stock of the acquired corporation with consideration
other than stock of the acquired corporation or stock of the acquiring
corporation, will be considered in determining whether a substantial proprietary
interest is preserved. Generally, two corporations are related persons if either
the
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Marine Bancshares, Inc.
June 3, 2003
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corporations are members of the same affiliated group (without regard to the
exceptions in Section 1504(b) of the Code), or the purchase of stock of one
corporation by another corporation would result in the purchase being treated as
a redemption of stock of the first corporation under Section 304(a)(2) of the
Code (determined without regard to Section 1.1502-80(b) of the Regulations).
Sales by the shareholders of the acquired corporation of stock of the acquiring
corporation received in the transaction to unrelated persons occurring before or
after a reorganization are disregarded.
The Merger will satisfy the continuity of interest requirement. Old
Florida has represented that all the shares of Marine Common outstanding
immediately prior to the Merger will be exchanged solely for shares of Old
Florida Common, except for cash paid to dissenters or in lieu of fractional
shares. As a condition precedent to the obligations of the parties under the
Agreement, Dissenting Shares may not represent more than 20% of the Marine
Common entitled to vote on the Merger. Old Florida has represented further that
neither Old Florida nor a related person has any plan or intention, in
connection with the plan of reorganization, to reacquire any shares of Old
Florida Common issued in the Merger.
Even though the Merger qualifies as a tax-free reorganization under
Section 368(a)(1)(A) of the Code, Marine shareholders receive tax free only
shares of Old Florida Common in accordance with Section 354 of the Code. Because
Marine shareholders will be exchanging their stock for stock of Old Florida,
both of which corporations are parties to the reorganization, no gain or loss
will be recognized under Section 354(a) of the Code.
If a Marine shareholder dissents to the Merger and receives solely cash
in exchange for such shareholder's Marine Common shares, such cash will be
treated as having been received by such shareholder as a distribution in
redemption of such shareholder's Marine Common shares, subject to the provisions
and limitations of Section 302 of the Code. Unless the redemption is treated as
a dividend under Section 302(d) of the Code, such shareholder will recognize
gain or loss measured by the difference between the amount of cash received and
the tax basis of the Marine Common shares so redeemed. This gain or loss will be
capital gain or loss if the shares of Marine Common were held by such
shareholder as a capital asset at the time of the Merger. If, on the other hand,
the redemption is treated as a dividend under Section 302(d) of the Code, the
full amount of cash received by such shareholder will be treated as ordinary
income to the extent of Marine's current or accumulated earnings and profits.
Under the tests of Section 302 of the Code, the redemption of a
dissenting Marine shareholder's Marine Common generally will be treated as a
dividend unless the redemption (i) results in a "complete termination" of such
shareholder's direct or indirect stock interest in Old Florida under Section
302(b)(3) of the Code, (ii) is "substantially disproportionate" with respect to
such shareholder under Section 302(b)(2) of the Code, or (iii) is "not
essentially equivalent to a dividend" with respect to such shareholder under
Section 302(b)(1) of the Code.
In order to determine whether there has been a complete termination, a
substantially disproportionate redemption, or a redemption not essentially
equivalent to a dividend with respect to a dissenting Marine shareholder, it is
necessary to consider the shares of Old Florida Common owned by persons from
whom ownership is attributed to such shareholder under the rules of Section 318
of the Code. Under Section 318 of the Code, a shareholder is considered to own
shares that are directly or indirectly owned by certain members of such
shareholder's family or by certain trusts, partnerships or corporations in which
such shareholder has an ownership or beneficial interest. Such shareholder is
also considered to own any shares with respect to which he holds exercisable
options. In certain cases, a dissenting Marine shareholder may be deemed to own
constructively the shares of Old Florida Common held by persons who do not
exercise dissenters' rights.
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Marine Bancshares, Inc.
June 3, 2003
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Payment of cash to a Marine shareholder in lieu of fractional Old
Florida Common shares will be treated as if such shares were distributed as part
of the exchange and then redeemed by Old Florida. The payment received by a
Marine shareholder will be treated as having been received as a distribution in
full payment and exchange for the share redeemed as provided in Section 302(a)
of the Code.
OPINIONS
Therefore, based on the description of the Merger in the Agreement, the
Registration Statement and the Proxy Statement/Prospectus, the representations
set forth in the Officers' Certificates, the foregoing legal authorities, and
the assumptions stated above, it is our opinion that:
1. The Merger will be a reorganization within the meaning of
Section 368(a)(a)(A) of the Code. Marine and Old Florida each will be a "party
to the reorganization" within the meaning of Section 368(b) of the Code.
2. No gain or loss will be recognized by Marine upon the transfer
of its assets to Old Florida in exchange for shares of Old Florida Common and
the assumption by Old Florida of the liabilities of Marine.
3. No gain or loss will be recognized by Old Florida on the
receipt of the assets of Marine in exchange for shares of Old Florida Common and
the assumption by Old Florida of the liabilities of Marine.
4. The basis of the assets of Marine in the hands of Old Florida
will be the same as the basis of such assets in the hands of Marine immediately
prior to the Merger.
5. The holding period of the assets of Marine to be received by
Old Florida will include the period during which the assets were held by Marine.
6. No gain or loss will be recognized by the Marine shareholders
upon the receipt of shares of Old Florida Common in exchange for their shares of
Marine Common.
7. The basis of the shares of Old Florida Common to be received
by a Marine shareholder will be the same as the basis of the shares of Marine
Common surrendered in exchange therefor.
8. The holding period of the shares of Old Florida Common to be
received by a Marine shareholder will include the period during which the shares
of Marine Common surrendered in exchange therefor were held, provided the shares
of Marine Common are a capital asset in the hands of the Marine shareholder at
the time of the Merger.
9. If a Marine shareholder dissents to the Merger and receives
solely cash in exchange for such shareholder's Marine Common, such cash will be
treated as having been received by such shareholder as a distribution in
redemption of such shareholder's Marine Common, subject to the provisions and
limitations of Section 302 of the Code. Unless the redemption is treated as a
dividend under Section 302(d) of the Code, such shareholder will recognize gain
or loss measured by the difference between the amount of cash received and the
tax basis of the Marine Common so redeemed. This gain or loss will be capital
gain or loss if the shares of Marine Common are held by such shareholder as a
capital asset at the time of the Merger. If, on the other hand, the redemption
is treated as a dividend under Section 302(d) of the Code, the full amount of
cash received by such shareholder will be treated as ordinary income to the
extent of Marine's current or accumulated earnings and profits.
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10. Payment of cash to a Marine shareholder in lieu of fractional
Old Florida Common shares will be treated as if such fractional shares were
distributed as part of the exchange and then redeemed by Old Florida. The
payment received by a Marine shareholder will be treated as having been received
as a distribution in full payment and exchange for the share redeemed as
provided in Section 302(a) of the Code, unless such distribution is essentially
equivalent to a dividend within the meaning of Section 302(b)(1) of the Code.
Our opinion is limited to the foregoing federal income tax consequences
of the Merger, which are the only matters as to which you have requested our
opinion. We do not address any other federal income tax consequences of the
Merger or other matters of federal law and have not considered matters
(including state or local tax consequences) arising under the laws of any
jurisdiction other than matters of federal law arising under the laws of the
United States. Furthermore, our opinion does not address any federal income tax
consequences of the Merger that may be relevant to a Marine shareholder in light
of that shareholder's particular status or circumstances, including, without
limitation, Marine shareholders that are (i) foreign persons, (ii) insurance
companies, (iii) financial institutions, (iv) tax-exempt entities, (v)
retirement plans, (vi) dealers in securities, (vii) persons subject to the
alternative minimum tax, (viii) persons whose shares of Marine Common were
acquired pursuant to the exercise of employee stock options or otherwise as
compensation, (ix) persons who receive Old Florida Common other than in exchange
for Marine Common, or (x) persons who hold shares of Marine Common as part of a
hedge, straddle, or conversion transaction.
Our opinion is based on the understanding that the relevant facts are,
and will be as of the Effective Time, as set forth in this letter. If this
understanding is incorrect or incomplete in any respect, our opinion could be
affected. Our opinion is also based on the Code, Regulations, case law, and
Service rulings as they now exist. These authorities are all subject to change,
and such change may be made with retroactive effect. We can give no assurance
that after any such change our opinion would not be different. Our opinion is
not binding on the Service, and no ruling has been, or will be, requested from
the Service as to any federal income tax consequence described above. We
undertake no responsibility to update or supplement this opinion.
The opinion expressed herein is furnished specifically for you and your
respective shareholders, and may not be relied upon, assigned, quoted, or
otherwise used in any manner or for any purpose by any other person or entity
without our specific prior written consent. Notwithstanding the preceding
sentence, we hereby consent to the filing of this opinion with the Securities
and Exchange Commission as an exhibit to the Registration Statement, and to the
references to us in the Registration Statement under the captions "The Merger -
Federal Income Tax Consequences of the Merger" and "Legal Matters." In giving
such consent, we do not thereby admit that we are in the category of persons
whose consent is required under Section 7 of the Securities At of 1933, as
amended.
Very truly yours,
/s/ Werner & Blank, LLC
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